He's your guy
when stocks are high, but he'll start to wear when they
descend.

It's then that those louses go back to their spouses; diamond's are a girl's best friend.

Marilyn Monroe, Diamonds are a Girl's Best Friend

So sang one lady, and with good reason.
Sales of diamonds account for a large percentage of a typical
jeweler's gemstone business, and ain't nobody gonna
tell no female different. One of the important reasons for
the dominance of diamond in the gem market is the existence
of a comprehensive and internationally-accepted system of
quality analysis. This allows us common folk to buy with confidence,
for with a diamond grading report we have an independent "expert"
opinion of the stone's quality. But how "expert"
are them experts anyway. Is this opinion, itself, always infallible?
Do the different quality steps really indicate genuine differences
in quality? Even a dyed-in-the-wool head-in-the-sand colored
stonist like me can see the impact diamond grading will have
on the rest of the precious stone business, as the colored
stone trade continues to move towards some type of grading
system. It is with this in mind that we examine some of the
problems with the present diamond grading system.

From the outset, I've got to say
that I believe in the idea of gemstone grading. When a customer
is about to lay down a large piece of change for a tiny chunk
of ice, colored or otherwise, he/she wants, needs and should
have access to an independent opinion of that gem's quality.
Trust alone is not enough. A glance at the Bangkok Post and frequent tales of tourist gem rip-offs contained therein
will confirm this.

The problems come with the form that
this opinion should take. Whatever it is, it should be reproducible
to a reasonable tolerance, and it should accurately assess
the stone's quality in grades which represent logical
steps in quality. Unfortunately, neither of these questions
can be answered in the affirmative using the present diamond
grading system.

Today, diamonds are graded around the
world with the system developed in the 1930s by the Gemological
Institute of America (Pagel-Theisen, 1980). Using this system,
stones are graded for color and clarity on the scales reproduced
in this article (see Table 1).

Table 1: The GIA Color Scale

Colorless

Near Colorless

Faint Yellow

Very Light Yellow

D

E

F

G

H

I

J

K

L

M

N

O

The GIA Clarity
Scale

Eye Clean (face-up position)

Eye Visible Inclusions

FL

IF

VVS1

VVS2

VS1

VS2

SI1

SI2

I1

I2

I3

Man is, by nature, a "pigeon-holing"
animal. Given a pile of diamonds and asked to grade them,
he will slot them into as many categories as is humanly possible,
and for humans that's a lot of slots. Perhaps too many.
"But wait! If two stones are truly different, don't
they belong in different categories?" Yes and no. Yes,
if your purpose is to separate them into as many categories
as possible. We all know that every stone is different, and
so if that is our aim we would need an infinite number of
slots. But in diamond grading we are attempting to group stones
into quality categories, with each step down representing a real, logical difference in quality. This we do not
find with the present system of diamond grading. And therein
lies much of the problem.

Examples of this failure to reflect
real quality steps are given in the current color and clarity
scales. For pale-colored diamonds, colorless is best. All
agree on this point. Yet on the color scale we find the colorless category pigeon-holed into at least three (D, E and F) or
as many as six (D, E, F, G, H and I) different grades, depending
on one's eyesight and the position and size of the stone.
In terms of clarity we find the same infinite-slot attitude,
with the top eight grades lacking inclusions visible to the
eye. Now you'll have to excuse me cause I've always
been a bit dim-witted 'bout certain things, but what
difference does an inclusion make if you can't see it?
And this poor country boy can't quite figure out how
there can be three different color grades of colorless?
One possible answer is that grades are smaller to make them
more accurate. But if this were true the difference in price
between one category and the next adjacent to it should be
slight. And let me tell ya' Ace, this just ain't
the case.

Take a quick gander at Table 2. It shows
the prices for 1.00 carat stones from the Jan. 25, 1991 issue
of the Rapaport Diamond Report. Here we see the difference
in price between a "D-IF" and a "D-VVS1"
stone is 37 percent, and the difference between "D-IF"
and "E-IF" is also 37 percent.

These differences in price for stones
of the upper categories are in spite of the fact that the
stones, for all intents and purposes, look the same to the
naked eye. In other words, today's system does not satisfy
the criterion that the grades be spaced such that they indicate
real, logical steps in quality.

Table
2: Diamond Prices

IF

VVS1

VVS2

VS1

VS2

SI1

SI2

I1

I2

I3

D

18000

11500

9500

7500

6200

4900

3900

3000

2300

1500

E

11500

9500

7700

6200

5500

4500

3800

2900

2200

1400

F

9500

7700

6500

5700

4900

4200

3700

2800

2100

1400

G

7700

6500

5500

5000

4500

3900

3600

2700

2000

1300

H

6500

5500

4900

4500

4100

3600

3400

2600

1900

1300

I

5200

4700

4400

3900

3600

3400

3100

2500

1800

1200

J

4600

4200

3900

3600

3400

3200

2900

2400

1700

1200

Somewhere along the road to Mecca, we
took the Timbuktu turnoff by mistake. But I can understand
how the present mess was arrived at. In the 1930s and 40s,
the system was developed in response to an almost total lack
of standards. From no standards, however, we've gone
to the opposite extreme, where the standards are so stringent
that even the experts cannot meet them.

The current pricing differences between
adjacent categories become even tougher to understand when
one realizes that the grades are not completely reproducible.
Most diamond grading laboratories will admit to a degree of
error of between one half to one full grade for both color
and clarity in either direction. Yes (cough, cough),
that's right, one half to one full grade in either direction.
This means that an "F-VVS2" today could have a color
grade of E, F or G, and a clarity of VVS1, VVS2 or VS1 tomorrow,
even though it was graded at the same lab by the same grader
each time. With differences like that, we're talkin'
some serious dough, Joe, and I don't mean play dough.

This may seem too much to take for the
milk-and-biscuits crowd down at Merle's Diner and Cufflinks.
Why the very idea that those gemolololol…….gem docs……don't
know their Ds from their Es has sort of a heretical
ring to it. So I'd best give a bit of background. In
September of 1981, The Goldsmith, an American trade
magazine, published an article entitled "Diamond certificates
on trial: The Goldsmith tests three major US gem labs"
(Federman and Farrell, 1981). In it they tell how they tested
the accuracy of 145 diamond grading reports issued by three
major US gem labs: Gemological Institute of America (GIA),
European Gemological Laboratories (EGL), and International
Gemological Institute (IGI, New York). Reports on 145 diamonds
and the corresponding stones were obtained from one of these
three labs. The stones were then graded by a hand-picked team
of four gemologists, three of whom had worked for one of the
tested labs. Their findings? Problems were found in 92 out
of 145 reports. A whopping 37 percent were stones of which
either or both the color and clarity grade was at least one
full grade higher than that given by The Goldsmith's
graders. None of the labs tested escaped unscathed.

Each of the above labs was then invited
to comment at the end of the article. Both the EGL and the
IGI were repentant, admitting that there was a problem. Bert
Krashes of the GIA, however, refused to admit the possibility
of error on the part of GIA, stating that he felt that The
Goldsmith was unqualified to be judging laboratories. Harumph, harumph!

That there is a very real problem can
be seen simply by observing the marketplace. Many diamond
dealers will freely admit that it is common to submit a single
stone for grading as many as six or more times. If, as Mr.
Krashes apparently felt, there was no chance of receiving
a better grade, dealers would not waste their money. But if
a dealer, whose stone was a 1.0 carat "E-IF" today,
resubmitted it and tomorrow it came out "D-IF",
he would stand to make over $6,000. At $50 a throw for testing
there is room for an awful lot of resubmissions. We ain't
talkin' Merle's Diner and Cufflinks no more. We's
talkin' 47th Street.

The solution? That is a toughie. Clearly
there is a major problem here, one that will require more
than denial. No one is to blame. The diamond grading system
that we have today was developed in the best of faith by the
GIA. They don't set the prices, the market does. They
just grade the stones. Perhaps Bert Krashes of the GIA summed
it up best when told The Goldsmith that the article
"only reaffirmed that, in its present state, diamond
grading is not a precise science."

But we can change something if it is
not working. Those who designed the present system obviously
did not foresee the day when there would be huge price differences
between adjacent categories. Such a day is already here. The
marketplace, by developing huge price differences between
adjacent grades, has made clear that it does not understand
the diamond grading system and its limitations Well, if the
mountain will not come to Moses, then by jove, Moses better
get his ass over to the mountain. If the market doesn't
understand the present system, then us gem docs had best adapt
the system to one that the market can understand.

It is hard ball time now, time for the
tough decisions. No field can prosper while remaining static.
The current grading system is a good one, but has problems, fixable problems. Diamonds may be forever, but the
present diamond-grading methods do not have to be. If we expect
our industry to prosper, we must be prepared to make changes
that will improve it. And don't give me none of this
malarkey about "market inertia." Market inertia-advocates
need to study a little history. Try specializing in ancient
life forms – namely dinosaurs.

How can we hope for a useful system
for colored stones if we can't get diamonds right? The
system we devise needs to meet two major criteria: it must
divide the stones into divisions of quality in a logical progression
and it must be reproducible within an acceptable degree of
error.

A logical progression means that in
most cases there are clear visual differences between stones
at the center of the grades. Today, one tiny pinpoint
barely visible at ten power will knock a stone out of the
internally flawless category. Does this pinpoint really affect
the appearance or durability of the stone, even one bit? C'mon
Doc, give it to me straight, I can take it. "But wait,
it affects the rarity." Rarity alone, though, does not
a valuable stone make. It is of importance only insofar as
it relates to beauty, with the more beautiful being the more
rare. This is where we have erred in the present system. Today
10x magnification (or 10.5x, as many graders' microscopes
do not really go down to 10x) is the standard for clarity
grading. If rarity alone is of importance, divorced from beauty,
then why not use 100x as the standard? A stone clean under
100x is certainly more rare than that clean under ten power.

But the fact is that rarity cannot be
divorced from beauty. As diamonds are not yet, to the best
of my knowledge, worn in jewelry with ten-power lenses mounted
above them, it seems foolish to have ten power as the standard
for clarity grading. I am not saying that magnification shouldn't
be used, only that the final grade be based upon what is visible
to the naked eye, for this is what will be used when the
gem is worn in jewelry.

In a similar way the color scale must
be reformed. If the present grades D, E and F all appear colorless
when the stone is face-up, then they should be combined into
a single grade. Who cares what the stone looks like through
the back? I mean, really, Joe, am I that slow? We don't
judge its brilliance in that direction, do we? Judging a diamond's
color culet-up (as is the current practice) is like wine tasting
with your toes. It goes right beyond nonsense into the realm
of noooooooonnnnnnsssseeeeennnnnnnssseee.

Many of the current color and clarity
grades are too narrow, so much so that graders themselves
have difficulties getting the same stone in the same category
every time. This means that the grades are too small. They
need to be expanded so that stones of different grades have
different appearances to the trained, but naked, eye. Let's
throw the wee little grades out with the wee-wee, unless there's
some difference we can see-see.

In developing a system of quality analysis
for gemstones we must make absolutely certain that it makes
sense to the consumer, for it is the consumer who will
in the end have to live with the product. Far too often
we spend our time discussing what will benefit the trade,
when it is the consumer that should be receiving our attention.
Remember, we will have no business without the consumer.

If there is anyone from the world of
diamonds still reading, I would like to direct a few final
words their way. Step back from your loupes and your stethoscopes
and smell the roses. That's what this is all about, right?
This thing should make sense, not just cents. And if diamond
dealers and graders can't come up with a better reason
for doing what their doing than "we've always done
it like this," then I say phooey to youey, Louie. Go
sell soap instead. And while you're at it, give your
logic a bath 'cause it stinks.

Postscript

I wrote the above article in 1987 from the perspective of someone
who cares not one wit about the diamond market, except for its
impact on colored stones. Such innocence. After writing this
article (and after spittin' a few hayseeds outta my mouth
once I'd got the barn door shut), I said "Hey, this's
kinda interesting, leastways to this diamant bumpkin. Why don't
we ask a few o' them "iceperts" what they have
to say about the ideas presented herein. Yeah, we can even ask
God over'n Santa Monica."

Well, to put it briefly,
them experts didn't have nothing to say. Not now ay knowhow.
I wrote to Diamond'dis and Diamond'dat,
DiamondToday, DiamondYesterday and DiamondForever. This drew a D-Flawless know-nothing response, even under ten
power. And yes, I did write to God. Lotta good it did me.
All I got back was an encoded response sayin' they had
nothin' to say. But we did hear from a number of people
not directly involved in the diamond trade, except at the
retail level. This is most disappointing, for it almost seems
like the diamond trade and diamond graders have a gag policy
out on discussion of diamond grading. Educate us, pleeeese?
Put us back on the straight 'n' narrow.

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